Annual report pursuant to Section 13 and 15(d)

Intangible Assets and Goodwill

Intangible Assets and Goodwill
12 Months Ended
Oct. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill



Goodwill and Other Intangible Assets are evaluated on an annual basis. If there is reason to believe that their values have been diminished or impaired. Write-downs, if any, will be included in results from operations.


The identifiable intangible assets acquired and their carrying value as of October 31, 2017 and 2016, are as follows:


    October 31,     October 31,  
    2017     2016  
Customer relationships (weighted average life of 10 years)   $ 896,624     $ 886,164  
Non-compete agreements (weighted average life of 3 years)     198,911       198,911  
Patents and other (weighted average life of 10 years)     294,175       294,175  
Total identifiable intangible assets - gross carrying value     1,389,710       1,379,250  
Less: accumulated amortization     (1,182,537 )     (1,011,833 )
Total intangible assets, net   $ 207,173     $ 367,417  


Future estimated annual amortization expenses as of October 31, 2017 as follows:


Years Ending October 31   Amount  
2018   $ 40,595  
2019     40,595  
2020     40,595  
2021     40,595  
2022     40,595  
Thereafter     4,198  
Totals   $ 207,173  


Amortization of patents, customer relationships, non-compete agreements and licenses included as a charge to income amounted to $163,519 and $46,986 for the years ended October 31, 2017 and 2016, respectively. Goodwill is not being amortized.


As a result of the acquisitions of Coda Octopus Martech, Ltd., Coda Octopus Colmek, Inc., Coda Octopus Products, Ltd., and Dragon Design, Ltd., the Company has goodwill in the amount of $3,382,108 as of October 31, 2017 and 2016, respectively. The carrying amount of goodwill as of October 31, 2017 and 2016, respectively are recorded below:


    2017     2016  
Breakout of Goodwill:            
Coda Octopus Colmek, Inc.   $ 2,038,669     $ 2,038,669  
Coda Octopus Products, Ltd     62,315       62,315  
Coda Octopus Martech, Ltd     998,591       998,591  
Coda Octopus Martech, Ltd (from Dragon Design Ltd Acquisition)     282,533       282,533  
Total Goodwill   $ 3,382,108     $ 3,382,108  


Considerable management judgment is necessary to estimate the fair value of goodwill. We enlisted the assistance of an independent valuation consultant to determine the values of our intangible assets and goodwill at the dates of acquisition and by management for the dates thereafter.


Based on various market factors and projections used by management, actual results could vary significantly from management’s estimates.


The Company’s policy is to test its goodwill balances for impairment on an annual basis, in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.


The goodwill assets of the Company arise chiefly from the acquisition of two wholly owned subsidiaries that comprise the Company’s services segments – Colmek and Martech. The goodwill impairment evaluation was conducted at the end of the financial year 2017 and management’s opinion is that the fair value exceeds the carrying values. As such no impairment was recorded by management.


Based on these evaluations, the fair value of goodwill exceeds its carrying value. As such no impairment was recorded by management.